SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check
the appropriate box: [X] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy
Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant
to ss. 240.14a-11(c) or ss. 240.14a-12
AMPEX CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMPEX Corporation
500 Broadway
Redwood City, California 94063
[April __, 1999]
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Ampex Corporation, to be held at the Westin St. Francis Hotel,
335 Powell Street, San Francisco, California on Friday, May 14, 1999 at 9:00
a.m.
The matters expected to be acted upon at the meeting are described in
detail in the accompanying Notice of 1999 Annual Meeting of Stockholders and
Proxy Statement. A proxy, as well as a copy of the Company's 1998 Annual Report,
are included along with the Proxy Statement. These materials are being sent to
stockholders on or around [April __, 1999].
It is important that your shares be represented at the Annual Meeting,
whether or not you plan to attend. Accordingly, please take a moment now to
complete, sign, date and mail the enclosed proxy.
We look forward to seeing you at the meeting.
Sincerely,
Edward J. Bramson
Chairman
<PAGE>
AMPEX CORPORATION
500 Broadway
Redwood City, California 94063
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Ampex Corporation (the "Company") will be held at the Westin St. Francis Hotel,
335 Powell Street, San Francisco, California on Friday, May 14, 1999 at 9:00
a.m. for the following purposes:
1. To elect one Class II director to serve until the 2002 Annual Meeting
of Stockholders and until his successor has been elected and qualified
or until his earlier resignation, removal for cause or death. The
Board of Directors has nominated Douglas T. McClure, Jr. for election
as the Class II director.
2. To vote on a proposal to amend the Company's Restated Certificate of
Incorporation to: (a) increase the total number of authorized shares
of capital stock of the Company from 176,000,000 to 226,000,000
shares; and (b) increase the number of authorized shares of the
Company's Class A Common Stock, par value $0.01 per share (the "Class
A Stock"), from 125,000,000 to 175,000,000 shares.
3. To vote on a proposal to amend the Company's 1992 Stock Incentive Plan
to increase the number of shares of Class A Stock available for
issuance thereunder by 4,000,000 shares (from 4,250,000 to 8,250,000
shares).
4. To vote on a proposal to ratify the selection of
PricewaterhouseCoopers LLP as independent public accountants for the
Company for the current fiscal year.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 31, 1999
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
By Order of the Board of Directors
Edward J. Bramson
Chairman
Redwood City, California
[April __, 1999]
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
AMPEX CORPORATION
PROXY STATEMENT
[April ___, 1999]
The accompanying proxy is solicited on behalf of the Board of
Directors of Ampex Corporation, a Delaware corporation ("Ampex" or the
"Company"), for use at the 1999 Annual Meeting of Stockholders of the Company to
be held at the Westin St. Francis Hotel, 335 Powell Street, San Francisco,
California, on Friday, May 14, 1999 at 9:00 a.m. (the "1999 Annual Meeting" or
the "Meeting"). Only holders of record of the Company's Class A Common Stock,
$0.01 par value per share (the "Class A Stock") at the close of business on
March 31, 1999 will be entitled to vote. At the close of business on that date,
the Company had _____________ shares of Class A Stock outstanding and entitled
to vote. A majority of the outstanding Class A Stock (__________ shares) will
constitute a quorum for the transaction of business. This Proxy Statement and
the accompanying proxy were first mailed to stockholders on or about [April __,
1999]. An Annual Report containing all information specified by Rule 14a-3 of
the rules of the Securities and Exchange Commission (the "SEC") was mailed to
each stockholder concurrently with a copy of this Proxy Statement.
TABLE OF CONTENTS
Page
Voting Rights............................................................... 1
Solicitation and Revocability of Proxies.................................... 2
Company Background.......................................................... 2
Proposal No. 1.............................................................. 2
Election of Class II Director...................................... 3
Proposal No. 2.............................................................. 5
Amendment to Restated
Certificate of Incorporation...................................... 5
Proposal No. 3.............................................................. 7
Amendment of 1992 Stock Incentive Plan ............................ 7
Proposal No. 4.............................................................. 11
Ratification of Selection of
Independent Public Accountants ................................... 11
Security Ownership of Certain Beneficial
Owners and Management............................................. 12
Compensation of Executive Officers.......................................... 17
Report on Repricing of Options...............................................21
Report of the Compensation Committee
on Executive Compensation......................................... 24
Company Performance Graph................................................... 27
Certain Relationships and Related Transactions.............................. 28
Stockholder Proposals for 2000 Annual Meeting............................... 29
Other Business.............................................................. 29
Annual Report on Form 10-K.................................................. 29
Annex A..................................................................... 30
Certificate of Amendment of Restated
Certificate of Incorporation.......................................30
ENCLOSURE: Ampex Corporation 1998 Annual Report
VOTING RIGHTS
Holders of Class A Stock are entitled to one vote for each share held
as of March 31, 1999 (the "Record Date"). Shares of Class A Stock may not be
voted cumulatively for the election of directors. If the enclosed proxy is
properly signed and returned, the shares represented thereby will be voted. If
the stockholder specifies in the proxy how the shares are to be voted, they will
be voted as specified. If the stockholder does not specify how the shares are to
be voted, they will be voted for the Company's nominee for election to the Board
of Directors, and in favor of each of the other items set forth in the
accompanying Notice of Meeting. The Company's transfer agent will tabulate all
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<PAGE>
votes cast. Abstentions and broker non-votes will be counted for determining
whether a quorum exists, but not for determining whether a proposal is approved.
The effect of an abstention or broker non-vote will be the same as a vote
against adoption of a proposal.
SOLICITATION AND REVOCABILITY OF PROXIES
Proxies in the enclosed form are being solicited by the Company, and
the expenses of soliciting such proxies will be paid by the Company. Following
the original mailing of the proxies and other soliciting materials, the Company
and/or its agents may also solicit proxies by mail, telephone, telegraph,
facsimile or in person. The Company does not currently expect that it will
retain a proxy solicitation firm. Following the original mailing of the proxies
and other soliciting materials, the Company will request brokers, custodians,
nominees and other record holders of the Company's Class A Stock to forward
copies of the proxy and other soliciting materials to persons for whom they hold
shares of Class A Stock and to request authority for the exercise of proxies. In
such cases, the Company, upon the request of the record holders, will reimburse
such holders for their reasonable expenses.
Any person signing a proxy in the form accompanying this Proxy
Statement has the power to revoke it prior to the 1999 Annual Meeting, or at the
Meeting prior to the vote pursuant to the proxy. A proxy may be revoked by: (i)
a notice in writing delivered to the Company stating that the proxy is revoked;
(ii) a subsequent proxy executed by the person executing the prior proxy and
presented at the Meeting; or (iii) attendance at the Meeting and voting in
person.
COMPANY BACKGROUND
Ampex is one of the world's leading providers of technologies for the
acquisition, storage and processing of visual information. The Company currently
provides digital image solutions for large-scale corporate, government, network,
entertainment and telecommunications applications. Its principal product groups
are its mass data storage and instrumentation products and its professional
video and other products. Ampex has significant experience in digital image
processing and has approximately 1,000 patents and patent applications in this
field and in recording technology, from which it has derived significant
licensing income, primarily from manufacturers of consumer video products around
the world. Recently, Ampex has sought to leverage its digital image technology
and expertise both internally and through selected strategic investments,
particularly in companies which are involved in the delivery of video images
over the Internet. In the last twelve months, the Company has acquired MicroNet
Technology, Inc., and has made investments in Reiter Associates, Inc., TV onthe
WEB, Inc. and Alternative Entertainment Networks, Inc. The Company has also
announced plans to establish program production and distribution facilities in
Los Angeles and New York City in order to produce Internet video content and
distribute it to targeted Internet markets. There can be no assurance that the
Company will realize any financial benefit from any such completed or future
acquisitions or production facilities.
References to "Ampex" or the "Company" include subsidiaries and
predecessors of Ampex Corporation, unless the context indicates otherwise.
PROPOSAL NO. 1
ELECTION OF CLASS II DIRECTOR
Background
The number of directors comprising the Company's full Board of
Directors is five, divided into three classes, designated Class I, Class II and
Class III. The Class I directors (Edward J. Bramson and William A. Stoltzfus,
Jr.) were elected at the 1998 Annual Meeting of Stockholders for three-year
terms that will expire at the 2001 Annual Meeting of Stockholders. The Class II
director (Douglas T. McClure, Jr.) was elected at the 1996 Annual Meeting of
Stockholders for a three-year term that will expire at the 1999 Annual Meeting.
The Class III directors (Craig L. McKibben and Peter Slusser) were elected at
the 1997 Annual Meeting for three-year terms that will expire at the 2000 Annual
Meeting. The Class II director elected at the 1999 Annual Meeting will serve for
a three-year term. A director may not be removed from office before the
expiration of his elected term except for cause, and only with the approval of
the holders of at least 80% of the Company's voting stock.
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<PAGE>
The Company's current Class II director, Mr. McClure, has been
nominated by the Board for reelection as the Class II director. Following the
1999 Annual Meeting, the Company will have two Class I directors, one Class II
director and two Class III directors constituting the full Board.
Election of Class II Director
At the 1999 Annual Meeting, stockholders will elect one Class II
director who will hold office until the 2002 Annual Meeting of Stockholders and
until his successor has been elected and qualified or until his earlier
resignation, removal for cause or death. The Class II director will be elected
by a plurality vote of the holders of Class A Stock represented and voting at
the Meeting. Shares represented by the accompanying proxy will be voted for the
election of the nominee recommended by the Company's management, unless the
proxy is marked in such a manner as to withhold authority to so vote. If the
nominee for any reason is unable to serve or for good cause will not serve, the
proxies may be voted for such substitute nominee as the proxy holder may
determine. The Company is not aware that its nominee will be unable to, or for
good cause will not, serve as a director.
Director/Nominee
Certain information concerning the Company's incumbent directors, as
well as the nominee for election as a Class II directors, is set forth below.
<TABLE>
Name of Director Age Principal Occupation Director Since
---------------- --- -------------------- --------------
Class I Directors/Nominees:
<S> <C> <C> <C>
Edward J. Bramson(1)(2)(3) 48 Director, Chairman of the Board and Chief 1992
Executive Officer of the Company
William A. Stoltzfus, Jr.(2)(3)(4) 74 Retired Vice President, Chemical Bank 1992
Class II Director:
Douglas T. McClure, Jr.(2)(3)(4) 46 Managing Director, The Private Merchant 1995
Banking Company
Class III Directors:
Craig L. McKibben(1) 48 Director, Vice President, Chief Financial 1992
Officer and Treasurer of the Company
Peter Slusser(2)(3)(4) 69 President and Chief Executive Officer, 1992
Slusser Associates, Inc.
</TABLE>
- ----------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of Stock Incentive Plan Committee
Class I Directors
Edward J. Bramson is Chairman of the Board and Chief Executive Officer
of the Company. He has been an officer and director of the Company since 1987,
and since January 1991 has been Chief Executive Officer of the Company. Mr.
Bramson also serves as Chairman of the Board and Chief Executive Officer of
Ampex Holdings Corporation, Vice President of MicroNet Technology, Inc., and
Assistant Secretary of Ampex Data Systems Corporation, each of which is a
subsidiary of the Company. Mr. Bramson is a director of each such subsidiary. He
is also the Chairman and Chief Executive Officer of Sherborne Holdings
Incorporated, Sherborne & Company Incorporated and Sherborne Investments
Corporation, a limited partner of Newhill Partners, L.P. and the managing member
of SH Securities Co., L.L.C. These entities, which are private investment
holding companies, may be deemed
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to be affiliates of the Company. Mr. Bramson is also a director of Hillside
Capital Incorporated, a private industrial holding company with which he has
been associated since 1976.
William A. Stoltzfus, Jr. has been a director of the Company since
September 1992. Mr. Stoltzfus was a Vice President of Chemical Bank from 1984
through his retirement in 1992, where he was responsible for marketing the
bank's products in the Middle East. From 1972 to 1976, Mr. Stoltzfus was the
U.S. Ambassador to Kuwait.
Class II Director/Nominee
Douglas T. McClure, Jr., the Class II director and nominee for
election, has been a director of the Company since February 1995. Mr. McClure is
a Managing Director of The Private Merchant Banking Company, a position he has
held since February 1996. From 1992 to 1994, he was a Managing Director of New
Street Capital Corporation, a merchant banking firm, and from 1987 to 1992, he
was a Managing Director of Drexel Burnham Lambert Incorporated.
Class III Directors
Craig L. McKibben is Vice President, Chief Financial Officer and
Treasurer of the Company. Mr. McKibben has been an officer and a director of the
Company since 1989. He also serves as Vice President and Treasurer of Ampex
Holdings Corporation and as a Vice President of each of Ampex Data Systems
Corporation, Ampex Finance Corporation and MicroNet Technology, Inc.,
subsidiaries of the Company. Mr. McKibben is also a director of each such
subsidiary. He is also Vice President and a director of Sherborne Holdings
Incorporated and of Sherborne & Company Incorporated. Since 1989, Mr. McKibben
has been a director and executive officer of NH Holding Incorporated, the
Company's former parent. From 1983 to 1989, he was a partner at the firm of
PricewaterhouseCoopers LLP, independent public accountants.
Peter Slusser has been a director of the Company since March 1992.
Since July 1988, Mr. Slusser has been the President and Chief Executive Officer
of Slusser Associates, Inc., a private investment banking company, and the
President and Chief Executive Officer of GBH Investments, Inc., a private
investment company. From December 1975 to March 1988 he was Managing Director
and Head of Mergers and Acquisitions for PaineWebber Incorporated. Mr. Slusser
is currently a director of Tyco International Ltd., a global manufacturer,
installer and distributor of a wide range of products and systems, and of
Sparton Corporation, an undersea defense products and electronics contract
manufacturer. He is also a director of Sherborne Holdings Incorporated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DOUGLAS
T. McCLURE, JR. AS CLASS II DIRECTOR.
Board and Committee Meetings
During the year ended December 31, 1998, the Board of Directors met
twelve times. Each director who served on the Board during fiscal 1998 attended
at least 75% of all Board meetings and meetings of Board committees on which he
served, during the periods in fiscal 1998 that he served, except as indicated
below.
Standing committees of the Board include an Executive Committee, an
Audit Committee, a Compensation Committee and a Stock Incentive Plan Committee.
The Board does not have a nominating committee or a committee performing a
similar function.
Messrs. Bramson and McKibben are currently members of the Executive
Committee. The Executive Committee generally is authorized to exercise all power
and authority of the Board to the extent permitted by Delaware law, except for
amending the Company's Certificate of Incorporation or Bylaws, issuing stock or
taking certain actions relating to a corporate merger, consolidation or
dissolution. The Executive Committee met once during fiscal 1998.
Messrs. Bramson, McClure, Slusser and Stoltzfus are currently the
members of the Audit Committee. The Audit Committee is authorized to recommend
independent auditors for the Company, to inquire into and make recommendations
to the Board concerning the scope of the audit and to review any recommendations
made by such
4
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auditors to the Board. The Audit Committee met three times during fiscal 1998.
Mr. Slusser did not participate in one such meeting.
Messrs. Bramson, McClure, Slusser and Stoltzfus are currently the
members of the Compensation Committee. The Compensation Committee determines
salaries and other compensation for the Company's executive officers (except for
compensation under the 1992 Stock Incentive Plan, which is determined by the
Stock Incentive Plan Committee), with Mr. Bramson abstaining from decisions with
respect to his own compensation. The Compensation Committee met three times
during fiscal 1998.
Messrs. McClure, Slusser and Stoltzfus are currently the members of
the Stock Incentive Plan Committee. The function of the Stock Incentive Plan
Committee is to administer the Company's 1992 Stock Incentive Plan and any
successor or additional stock incentive plans. The Stock Incentive Plan
Committee met six times during fiscal 1998.
Directors' Compensation
Directors who are officers of the Company receive no additional
compensation for serving on the Board of Directors or any Board committee. For
1998, the Company paid a quarterly retainer to non-employee directors of $5,000
each for service on the Board and Board committees. The Company also granted to
each non-employee director a nonqualified option to acquire 5,000 shares of
Class A Stock, at an exercise price of $2.4375 per share. Such options vest in
full at the Company's 1999 Annual Meeting, and expire 15 months after vesting.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Mr. Bramson, the Company's Chairman and Chief Executive Officer,
serves on the Compensation Committee of the Company's Board of Directors, but
does not participate in decisions of the Compensation Committee with respect to
his own compensation. During fiscal 1998, Mr. McKibben was an executive officer
of the Company and a director of Sherborne Holdings Incorporated ("SHI") and
Sherborne & Company Incorporated ("SCI"), each of which, during 1998, had an
executive officer (Mr. Bramson) who served as a director of the Company and on
its Compensation Committee. In addition, during fiscal 1998, Mr. Bramson was an
executive officer of the Company, a director of SHI, SCI and Sherborne
Investments Corporation, and the managing member of SH Securities Co., LLC.
During 1997, each of these entities had an executive officer (Mr. McKibben) who
served as a director of the Company. See "Certain Relationships and Related
Transactions."
PROPOSAL NO. 2
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously adopted and submits to
stockholders for their approval an amendment to paragraph 4.1 of ARTICLE FOUR of
the Company's Restated Certificate of Amendment, as previously amended (the
"Charter"), to: (a) increase the total number of authorized shares of the
Company's capital stock from 176,000,000 to 226,000,000 shares; and (b) increase
the number of authorized shares of Class A Stock from 125,000,000 to 175,000,000
shares (together, the "Charter Amendment"). The text of the proposed Charter
Amendment is set forth in Annex A to this Proxy Statement, and the following
discussion is qualified by reference to Annex A.
The authorized capital stock of the Company consists of 125,000,000
shares of Class A Stock; 50,000,000 shares of Class C Common Stock, par value
$0.01 per share (the "Class C Stock"); and 1,000,000 shares of Preferred Stock,
par value $1.00 per share (the "Preferred Stock"). Shares of Class C Stock are
convertible under certain circumstances, on a share for share basis, into shares
of Class A Stock. The Company's outstanding Preferred Stock consists of two
classes, the 8% Noncumulative Convertible Preferred Stock (the "Convertible
Preferred Stock") and the 8% Noncumulative Redeemable Preferred Stock (the
"Redeemable Preferred Stock"). Each share of Convertible Preferred Stock may be
converted, at the option of the holder, into 500 shares of Common Stock (based
on a liquidation value of $2,000 per share of Cumulative Preferred Stock and a
conversion price of $4.00 per share of Common Stock), subject to adjustment
under certain circumstances. The Company is obligated to redeem the Redeemable
Preferred Stock in quarterly installments beginning in June 1999 and the
Convertible Preferred Stock in quarterly installments beginning in June 2001.
The Company also has the option to redeem the Redeemable Preferred Stock at any
time and
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the Convertible Preferred Stock beginning in June 2001, and to make both
mandatory and optional redemption payments either in cash or in shares of Common
Stock. Shares of Common Stock issued to make such redemption payments will be
valued at the higher of $2.50 or the fair market value per share of Common
Stock.
In February 1999, holders of 5,630 shares of Convertible Preferred
Stock converted their shares into a total of 2,815,000 shares of Class A Stock.
As of the Record Date, the Company had issued and outstanding [52,597,547]
shares of Class A Stock, no shares of Class C Stock, and [4,370] shares of
Convertible Preferred Stock and 21,859 shares of Redeemable Preferred Stock. As
of the Record Date, a total of [6,802,470] shares of Class A Stock were reserved
for issuance under the following circumstances:
1. [2,185,000] shares upon the conversion of the remaining outstanding
Convertible Preferred Stock;
2. [3,597,470] shares upon the exercise of options granted under the
Company's 1992 Stock Incentive Plan;
3. [1,020,000] shares upon the exercise of Warrants that were issued to
certain holders of the Company's outstanding 12% Senior Notes due
2003, Series B.
Accordingly, approximately [65,599,983] shares of Class A Stock were
available for issuance and unreserved as of the Record Date. Although the
Company has not reserved any shares for the redemption of its Preferred Stock,
as indicated above, the Company has the option to redeem the outstanding shares
of its Redeemable Preferred Stock by issuing up to [17,487,200] shares of Class
A Stock and to redeem the remaining outstanding shares of its Convertible
Preferred Stock by issuing up to [3,496,000] shares of its Class A Stock. Under
certain circumstances, the Company may be required to redeem shares of its
outstanding Preferred Stock by issuing shares of Class C Stock. If the Company
were to issue any shares of Class C Stock, whether in connection with such a
redemption or otherwise, the Company would be required to reserve an equivalent
number of shares of Class A Stock (i.e., up to 50,000,000 shares) for issuance
upon conversion of such shares of Class C Stock. In addition, the Company wishes
to increase by 4,000,000 the number of shares available for option grants under
its 1992 Stock Incentive Plan, as discussed below under "Proposal No. 3 --
Amendment of 1992 Stock Incentive Plan." The Board of Directors believes that
the availability of additional shares of Class A Stock resulting from approval
of the proposed Charter Amendment will benefit the Company by providing
flexibility to issue shares of Class A Stock for the forgoing purposes, and for
a variety of other corporate purposes, including without limitation: making
acquisitions and investments; purchasing property; raising additional capital;
making future stock dividends, stock splits or other corporate distributions;
and payment of equity compensation.
The Company has no present commitments, agreements or plans to issue
any of the additional shares of Class A Stock to be authorized if the Charter
Amendment is adopted. However, the Board of Directors deems it prudent to have
such shares available for issuance, in order to enable the Company to respond
promptly should any circumstances arise that would make the issuance of Class A
Stock necessary or desirable, and to avoid the delay and expense of holding a
Special Meeting of Stockholders of the Company at such time. Such additional
shares may be issued on such terms and at such times as the Board of Directors
may determine without further action by the stockholders, unless otherwise
required by the applicable rules of the American Stock Exchange or other
applicable laws and regulations.
Each additional share of Class A Stock authorized by the Charter
Amendment will have the same rights and privileges as each outstanding share of
Class A Stock. Holders of Class A Stock have no preemptive rights to receive or
purchase any shares of the presently authorized Class A Stock or any of the
shares which would be authorized by the Charter Amendment. Except in certain
cases, such as a stock dividend or stock split, the issuance of additional
shares of Class A Stock would have the effect of diluting the ownership and
voting power of existing stockholders. In addition, the availability for
issuance of additional shares of Class A Stock could discourage, or make more
difficult, efforts to obtain control of the Company, including those that
stockholders may determine to be favorable or in their best interests. The
Company is not aware of any pending or threatened efforts to acquire control of
the Company, and the Charter Amendment is not intended to discourage any such
efforts.
If the Charter Amendment is approved by stockholders, it will become
effective upon filing with the Secretary of State of the State of Delaware,
which is expected to occur promptly after such approval. Stockholder approval
will
6
also constitute approval of the filing of a Certificate of Amendment of Restated
Certificate of Incorporation which incorporates the Charter Amendment, as set
forth in Annex A hereto.
Approval of this Proposal requires the affirmative vote of the holders
of a majority in voting power of the outstanding shares of Class A Stock. The
Board of Directors believes that approval of the Charter Amendment is advisable
and in the best interests of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
PROPOSAL NO. 3
AMENDMENT OF 1992 STOCK INCENTIVE PLAN
The Company's 1992 Stock Incentive Plan, as amended through August 22,
1996 (the "Plan"), provides for the granting of stock options and stock
appreciation rights with respect to the Company's Class A Stock to directors,
executive officers and other key employees, as well as to certain consultants,
advisors and service providers. A detailed description of the Plan is set forth
below, immediately following this Proposal. There are presently 4,250,000 shares
of Class A Stock reserved for issuance on exercise of options and stock
appreciation rights granted under the Plan. On February 12, 1999, the Board
approved an amendment to the Plan to increase the number of shares available for
issuance under the Plan from 4,250,000 shares to 8,250,000 shares (the "Plan
Amendment"), subject to approval by the stockholders of the Company at the
Meeting.
The purpose of the Plan is to provide incentives for participating
employees to maximize stockholder value and to provide compensation to
participants that is based on the Company's performance, as measured by the
price of its Class A Stock. Through the Plan, the long-range interests of key
employees are aligned with the interests of the stockholders of the Company as
these employees build an ownership interest in the Company. The Company believes
that the Plan is a very important compensation vehicle and that the number of
shares available for issuance must be increased to enable the Company to attract
and retain highly qualified employees. In recommending an increase of 4,000,000
shares, the Board considered a variety of factors, including the stock option
practices of other high-technology and Internet service companies with which the
Company competes for employees, and the recommendations of an independent
compensation consultant. The independent consultant concluded that the number of
shares currently available under the Plan, as a percentage of the Company's
outstanding stock, was not sufficient to enable the Company to be competitive in
the high technology industry. As of February 1, 1999, the Company had
approximately 1.1 million shares available for option grants under the Plan, and
approximately 2.5 million shares subject to issuance upon the exercise of
outstanding stock options granted under the Plan. Together, these shares
represent approximately [7%] of the Company's total outstanding Common Stock as
of the Record Date. If the proposed increase is approved, the percentage will be
approximately [14%], which is more in line with typical levels of approximately
15% for comparable technology companies with which the Company competes for
employees. The consultant also noted that Ampex has not requested any similar
increases for three years, whereas comparable companies typically request an
increase in shares available for option grants of approximately 7% to 11% of
total outstanding voting stock every two years. The 4,000,000 share increase
represents approximately 8% of the Company's total outstanding Common Stock as
of the Record Date. The Board believes that the proposed amendment to the Plan
is in the best interests of the Company and its stockholders.
The Company's executive officers and directors have an interest in
approval of this Proposal, because additional shares will be available for
grants of awards to these individuals under the Plan if this Proposal is
approved.
Approval of this Proposal requires the affirmative vote of the holders
of a majority of the outstanding shares of Class A Stock represented and voting
at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
7
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1992 Stock Incentive Plan
Set forth below is a summary of the principal features of the
Company's 1992 Stock Incentive Plan.
Background. The purpose of the Plan is to secure for the Company and
its stockholders the benefits arising from the ownership of Company stock
options and stock appreciation rights by directors and key employees (including
officers) of the Company (and of any parent or subsidiary corporations) who are
expected to contribute to the Company's future growth and success. The Plan was
adopted by the Company's Board of Directors and stockholders on July 16, 1992,
and awards may be granted under the Plan until no later than July 15, 2002. At
the 1995 and 1996 Annual Meetings of Stockholders, the stockholders approved
amendments to the Plan to increase the number of shares authorized for issuance
under the Plan from 750,000 shares to 2,250,000 shares (in 1995) and from
2,250,000 to 4,250,000 (in 1996). On February 12, 1999, the Board approved the
Plan Amendment, which will permit the issuance of an additional 4,000,000
shares, subject to stockholder approval at the 1999 Annual Meeting. See Proposal
No. 3 above. The Plan is administered by the Stock Incentive Plan Committee of
the Company's Board of Directors (the "Committee"). See "Board and Committee
Meetings," above.
Types of Awards. Under the Plan, the Company may grant awards with
respect to a maximum of 4,250,000 shares of the Company's Class A Stock
("Awards"), subject to adjustment as provided in the Plan. This number will
increase to 8,250,000 shares if the Plan Amendment is approved. Awards may be
either options ("Options") or stock appreciation rights ("Rights"). Options may
be either incentive stock options ("ISOs") meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
non-qualified stock options ("NQSOs") not meeting the requirements of Section
422 of the Code. Rights may be either an alternative to or in tandem with the
exercise of all or any portion of an Option granted to a Rights holder ("Tandem
Rights") or independent of any Options granted ("Non-Tandem Rights"). The
Company does not receive any payments from Award recipients upon the grant of
Awards.
An Option entitles the holder thereof to purchase shares of the Company's
Class A Stock upon exercise of the Option and payment of the exercise price.
However, upon exercise of an NQSO, the Company may elect to pay cash to the
holder for part or all of the shares covered by the Option, rather than issuing
shares of Class A Stock. The amount of any cash payment would be equal to the
difference between the exercise price for such shares and the fair market value
of such shares on the date of exercise. A Right entitles the holder thereof to
receive, upon exercise of the Right, cash in an amount equal to the difference
between the fair market value on the date of grant of the shares covered by the
Right and the fair market value of such shares on the date of exercise. However,
the Company may elect to issue to the holder, upon exercise of the Right, shares
of Class A Stock in lieu of part or all of the cash payment.
Eligibility. Awards may be granted to officers, employees, directors,
consultants, advisors and other service providers of the Company or of any
"parent" or "subsidiary" of the Company (as defined in the Plan). However, only
employees may receive ISOs, and consultants, advisors and service providers who
receive awards must have provided bona fide services to the Company, other than
in connection with the offer and sale of securities in a capital raising
transaction. As of February 28, 1999, 443 employees and three directors were
eligible to receive Awards.
Terms of Awards. Subject to the terms of the Plan, the Committee
determines who will receive each Award, the number of shares subject to each
Award, the grant date, the exercise price, the expiration date, the vesting and
other terms and conditions for the Award. For ISOs, the exercise price must be
at least equal to 100% of the fair market value per share of the Company's Class
A Stock on the date the ISO is granted (110% for an ISO granted to a person
owning ten percent or more of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company (a "Ten
Percent Stockholder")). For NQSOs, the exercise price must be at least equal to
85% of such market fair value. On March 31, 1999, the fair market value of the
Company's Class A Stock was $_____. Awards granted under the Plan must be
exercised within ten years of the grant date, except that an ISO granted to a
Ten Percent Stockholder must be exercised within five years of the grant date.
Unless otherwise specified by the Committee for a particular Award, Awards vest
over four years at the rate of 25% each year after the date of grant, provided
that the Award recipient is continuously employed by the Company during that
time. Each Award is evidenced by a Stock Option Agreement (for Options) or a
Rights Agreement (for Rights) issued by the Company. At the 1995 Annual Meeting
of Stockholders, the stockholders approved an amendment of the Plan that limits
awards under
8
the Plan to any participant during a fiscal year to 1,663,645 shares
(representing 5% of the shares of Common Stock that were outstanding as of the
date the amendment was approved).
To exercise an Award, the holder must deliver to the Company a written
notice of exercise along with full payment required for exercise (if
applicable). For shares purchased upon exercise of an Option, payment may be
made in any manner specified by the Committee.
If an Award holder's employment or other association with the Company
is terminated for any reason, any outstanding Award, to the extent that it was
exercisable on the date of such termination, may be exercised by the holder
within three months after such termination (or such shorter time as may be
specified in the Award agreement), but in no event later than the expiration of
the Award. If an Award holder's association with the Company is terminated
because of the Holder's death or disability, an Award may be exercised within
twelve months after such termination (or such shorter time as may be specified
in the Award Agreement), but in no event later than the expiration of the Award.
Amendment and Termination of the Plan. The Committee may amend the
Plan at any time and in any respect, except that the Committee cannot amend the
Plan to increase the number of shares available for ISO grants under the Plan or
to change the designation or class of employees eligible to receive ISOs,
without the approval of the stockholders of the Company. The Plan will terminate
on the earlier of July 16, 2002 or the date on which all shares available for
issuance under the Plan have been issued pursuant to the exercise of Awards.
Outstanding Awards. As of March 1, 1999, there were Options
outstanding with respect to 2,642,179 shares. There were no outstanding Rights.
No associates of any directors, executive officers or nominees for director have
received any Awards. No person other than those indicated in the table below
have received five percent or more of the Awards available for grant under the
Plan. Awards that will be granted in the future to the individuals and groups
indicated in the table below cannot be determined at this time, since all such
decisions are within the discretion of the Committee. However, as indicated
above, the Committee may not grant Awards to any participant (including any
executive officers) during any fiscal year with respect to more than 1,663,645
shares.
Options granted during fiscal 1998 under the Plan were allocated among
holders as set forth in the table below. The table does not include options
granted prior to 1998 that were repriced during 1998. See "Compensation of
Executive Officers," and "Report on Repricing of Options," below. Because the
Committee has full discretion with respect to the allocation of Awards among the
individuals and groups identified in the table, such allocations could be
changed by the Committee at any time with respect to future grants of Awards,
without amendment of the Plan and without approval by the Board or the
stockholders of the Company.
PLAN BENEFITS
1992 STOCK INCENTIVE PLAN
1998 OPTION GRANTS
Name and Position Dollar Value ($)(1) Number of Shares
----------------- ------------------- ----------------
Edward J. Bramson, Chairman $0 0
and Chief Executive Officer
Robert Atchison, Vice President $0 151,000 (2)
Richard J. Jacquet, Vice President $0 66,500 (2)
Craig L. McKibben, Vice President, $0 169,000 (2)
Chief Financial Officer and Treasurer
Joel D. Talcott, Vice President $0 49,000 (2)
and Secretary
9
<PAGE>
All current executive officers
as a group $0 685,500 (3)
All current non-executive officer
directors as a group $0 15,000
All non-executive officer employees
as a group $0 1,254,000 (4)
- ---------------------------
(1) Dollar value is considered $0 for all options granted because the
exercise price was greater than or equal to the fair market value of
the Company's Class A Stock on the date of grant. For valuation
information as of other dates, see the tables in "Option/SAR Grants"
and "Option /SAR Exercises and Values," below.
(2) This number represents options granted in exchange for the
cancellation of an equivalent number of options. See "Report on Option
Repricing," below.
(3) Includes 560,500 options granted in exchange for the cancellation of
the same number of options.
(4) Includes 895,350 options granted in exchange for the cancellation of
the same number of options.
Federal Income Tax Information
The following is a brief summary of the Federal income tax treatment
of the Plan, based on Federal income tax laws in effect on the date of this
Proxy Statement. This summary is not exhaustive and does not describe state or
local tax consequences.
Tax Treatment of ISOs. Options designated as ISOs under the Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Code. All Options that are not designated as ISOs are intended to be
NQSOs. An Option holder will recognize no income upon the grant of an ISO and
incur no tax on its exercise (unless the holder is subject to the alternative
minimum tax described below). If the Option holder holds the stock acquired upon
exercise of an ISO (the "ISO Shares") for more than one year after the date the
ISO is transferred to the holder and for more than two years after the date the
ISO was granted, the holder generally will realize long-term capital gain or
loss (rather than ordinary income or loss) upon disposition of the ISO Shares.
This gain or loss will be equal to the difference between the amount realized
upon such disposition and the amount paid for the shares. If the holder disposes
of ISO Shares by sale or exchange prior to the expiration of either required
holding period (a "disqualifying disposition"), then gain realized upon such
disposition, up to the difference between the fair market value of the shares on
the date of exercise (or, if less, the amount realized on a sale of such shares)
and the ISO exercise price, will be treated as ordinary income. Any additional
gain will be long-term or short-term capital gain, depending upon the length of
time the ISO Shares were held.
Alternative Minimum Tax. The difference between the fair market value
of stock purchased on exercise of an ISO (measured as of the date of exercise)
and the amount paid for that stock upon exercise of the ISO is an adjustment to
income for purposes of the alternative minimum tax. Currently, the alternative
minimum tax (which is imposed only to the extent it exceeds the taxpayer's
regular tax) is generally 26% of an individual taxpayer's alternative minimum
taxable income (28% to the extent the alternative minimum taxable income exceeds
$175,000). Alternative minimum taxable income is determined by adjusting regular
taxable income for certain items, increasing that income by certain tax
preference items and reducing this amount by the applicable exemption amount
($45,000 in the case of a joint return, subject to reduction under certain
circumstances). An alternative minimum tax adjustment applies unless a
disqualifying disposition of the ISO Shares occurs in the same calendar year as
the exercise of the ISO. In addition, upon a sale of ISO Shares that is not a
disqualifying disposition, alternative minimum taxable income is
10
<PAGE>
reduced in the year of sale by the excess of the fair market value of the ISO
Shares at exercise over the amount paid for the ISO Shares upon exercise.
Tax Treatment of NQSOs. An Option holder will not recognize any
taxable income at the time an NQSO is granted. However, upon exercise of an
NQSO, the holder will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the exercise price of the NQSO. If the holder receives cash upon exercise in
lieu of some or all of the shares subject to the NQSO, the amount of cash (net
of any exercise price paid) will be included in income as compensation. In
either case, the included amount will be treated as ordinary income by the
holder and will be subject to income tax withholding by the Company (either by
payment in cash by the Option holder or withholding from the holder's salary).
Upon resale of the shares by the holder, any subsequent appreciation or
depreciation in the value of the shares will be treated as capital gain or loss.
Tax Treatment of Rights. Rights will generally be subject to the tax
consequences discussed above for NQSOs. Thus, the grant of Rights will be
treated like the grant of an NQSO; any shares of stock received upon exercise of
Rights will be treated like shares received on exercise of an NQSO; and any cash
payment received upon exercise of Rights will be treated like a cash payment
received on exercise of an NQSO.
Capital Gains Tax Rate. Long-term capital gain generally is taxed at a
maximum rate of 20%, rather than the 39.6% maximum tax rate applicable to
ordinary income. For this purpose, in order to receive long-term capital gain
treatment, stock must be held for more than one year. (Different holding periods
may apply to dispositions in tax years beginning before 1998.) Capital gains may
be offset for capital losses and up to $3,000 of capital losses may be offset
annually against ordinary income.
Tax Treatment of the Company. Subject to the limits imposed by Section
162(m) of the Code, the Company will be entitled to a deduction in connection
with the exercise of an NQSO or Right by a domestic Option holder to the extent
that the holder recognizes ordinary income, provided that the Company complies
with IRS reporting requirements relating to the income. The Company will be
entitled to a deduction in connection with the disposition of ISO Shares only to
the extent that the holder recognizes ordinary income on a disqualifying
disposition of the ISO Shares, provided that the Company complies with IRS
reporting requirements relating to the income. The Company's ability to take a
deduction with respect to any exercises of options by certain executive officers
will be limited to the extent any such exercise results in annual compensation
in excess of $1,000,000.
ERISA
The Company believes that the Plan is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and
is not qualified under Section 401(a) of the Code.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP ("PWC") as its
principal independent accountants to perform the audit of the Company's
financial statements for fiscal 1999, and the stockholders are being asked to
ratify this selection. PWC and its predecessors have audited the financial
statements of the Company and its predecessors since 1987. Representatives of
PWC are expected to be present at the Meeting, will be given an opportunity to
make a statement at the Meeting if they desire to do so, and are expected to be
available to respond to appropriate questions. The affirmative vote of the
holders of a majority of the Company's outstanding shares of Class A Stock
represented and voting at the Meeting is required for approval of this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
General
As of the date of this Proxy Statement, the Company's authorized
capital stock consists of Class A Stock; Class C Stock; and Preferred Stock, par
value $1.00 per share (the "Preferred Stock"). The Class A Stock and Class C
Stock are sometimes collectively called the "Common Stock." On the Record Date,
there were __________ shares of Class A Stock outstanding and no shares of Class
C Stock outstanding. The holders of Class A Stock are entitled to elect all
members of the Board. The holders of Class C Stock are not entitled to any
voting rights, except as required by law. Shares of Class C Stock are
convertible into Class A Stock under certain circumstances.
The Company's authorized Preferred Stock includes three series,
designated as the 8% Noncumulative Preferred Stock (the "Noncumulative Preferred
Stock"); the 8% Noncumulative Convertible Preferred Stock (the "Convertible
Preferred Stock"); and the 8% Noncumulative Redeemable Preferred Stock (the
"Redeemable Preferred Stock.") In February 1999, holders of 5,630 shares of
Convertible Preferred Stock converted their shares into 2,815,000 shares of
Class A Stock. Accordingly, on the Record Date, there were no shares of
Noncumulative Preferred Stock outstanding, [4,370] shares of Convertible
Preferred Stock remaining outstanding and [21,859] shares of Redeemable
Preferred Stock outstanding. Shares of Noncumulative Preferred Stock and
Redeemable Preferred Stock are not convertible into Common Stock. Each share of
Convertible Preferred Stock is convertible, at the option of the holder thereof,
into 500 shares of Class A Stock, based on a conversion price of $4.00 per
share, subject to adjustment under certain circumstances. The holders of
Preferred Stock are not entitled to any voting rights, except as required by law
and in the specific circumstances set forth in the Certificates of Designations,
Preferences and Rights governing each series of Preferred Stock. In the event
that (and for so long as) the Company shall have failed to discharge any
mandatory redemption obligation with respect to either the Convertible Preferred
Stock or the Redeemable Preferred Stock, the Company's Board of Directors will
be increased by one director and the holders of all shares of such Preferred
Stock, voting as a single class, will be entitled to elect such additional
director.
As of the Record Date, there were [851] record holders of Class A
Stock (reflecting approximately ________ beneficial owners), no record holders
of Class C Stock, no record holders of Noncumulative Preferred Stock, [5] record
holders of Convertible Preferred Stock and [16] record holders of Redeemable
Preferred Stock.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the
beneficial ownership of the Company's voting securities by each person known by
the Company to be the beneficial owner of more than 5% of the Company's voting
securities as of the Record Date. Class C Stock, Convertible Preferred Stock and
Redeemable Preferred Stock are nonvoting and are not reflected in the table
below. Unless otherwise indicated, the persons named in the table below have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. However, as indicated by the notes following the
table, certain shares are deemed to be beneficially owned by more than one
person or entity as a result of attribution of ownership among affiliated
persons and entities.
<TABLE>
Amount and
Nature of Percentage
Name and Address of Beneficial of Class
Title of Class Beneficial Owner Ownership
<S> <C> <C> <C>
Class A Stock, Edward J. Bramson(1) [8,734,839] [16.5%]
$0.01 par value
Craig L. McKibben(2) [3,349,884] [6.3%]
Ampex Retirement Master Trust(3) [2,707,228] [5.1%]
FMR Corp.(4) [4,143,334] [7.9%]
12
<PAGE>
Credit Suisse Asset
Management(5) [2,975,000] [5.7%]
</TABLE>
- --------------------------
(1) Edward J. Bramson is Chairman of the Board and Chief Executive Officer
of the Company. His address is 135 East 57th Street, 32nd Floor, New
York, New York 10022. Mr. Bramson has stated, in certain filings with
the SEC pursuant to Sections 13(d) and 16(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), that he disclaims, or
does not admit, beneficial ownership of certain shares shown in the
table above for purposes of Sections 13(d), 13(g) and 16 of the
Exchange Act, or otherwise. Mr. Bramson is the controlling stockholder
of Sherborne Investments Corporation ("SIC"), controls SH Securities
Co., LLC, a limited liability company ("SHLLC"), and serves as
co-administrator of the Ampex Retirement Master Trust (the "Ampex
Trust") (see Note 3 below). Mr. Bramson is also the controlling
stockholder of Sherborne & Company Incorporated ("SCI"). SCI is the
general partner of a partnership that controls the voting stock of
Sherborne Holdings Incorporated ("SHI"). Accordingly, Mr. Bramson may
be deemed to own beneficially all shares of Class A Stock beneficially
owned, directly or indirectly, by SIC, SHLLC, the Ampex Trust, SCI and
SHI. However, Mr. Bramson has no pecuniary interest in the shares held
by the Ampex Trust, and has stated in filings with the SEC under
Section 13(d) of the Exchange Act that he expressly disclaims any
beneficial interest in such shares. The number of shares of Class A
Stock shown in the table as beneficially owned by Mr. Bramson includes
the following: [2,884,910] shares owned by Mr. Bramson directly (of
which up to 100,000 shares are subject to repurchase by the Company if
Mr. Bramson voluntarily resigns or is terminated for cause
(collectively, "ceases to be employed") prior to certain dates
occurring on or before February 18, 2000); 2,500 shares subject to
outstanding vested options held by Mr. Bramson under the Company's 1992
Stock Incentive Plan; 1,450,000 shares beneficially owned by SIC;
400,000 shares beneficially owned by SHLLC (of which 100,000 shares are
subject to repurchase if Mr. Bramson ceases to be employed before
October 23, 1999); [2,707,228] shares reported in the table as
beneficially owned by the Ampex Trust; 376,979 shares beneficially
owned by SCI; 693,566 shares beneficially owned by SHI and a subsidiary
of SHI (of which [150,000] shares are subject to an option granted by
SHI to Craig L. McKibben); and 219,656 shares beneficially owned by
Craig L. McKibben (see Note 2), with respect to which SHI holds a
proxy. Of the total shares reported as beneficially owned, Mr. Bramson
shares voting power with respect to [2,707,228] shares and shares
investment power with respect to [2,707,228] shares.
(2) Craig L. McKibben is a director and executive officer of the Company.
His address is 135 East 57th Street, 32nd Floor, New York, New York
10022. Mr. McKibben has stated, in certain filings with the SEC
pursuant to Sections 13(d) and 16(a) of the Exchange Act, that he
disclaims, or does not admit, beneficial ownership of certain shares
shown in the table above for purposes of Sections 13(d), 13(g) and 16
of the Exchange Act, or otherwise. Mr. McKibben serves as
co-administrator of the Ampex Trust (see Note 3 below) and,
accordingly, Mr. McKibben may be deemed to own beneficially all shares
of Common Stock beneficially owned by such trust. However, he has no
pecuniary interest in the shares held by the Ampex Trust and has stated
in filings with the SEC under Section 13(d) of the Exchange Act that he
expressly disclaims any beneficial interest in such shares. The number
of shares of Class A Stock shown in the table as beneficially owned by
Mr. McKibben includes the following: 219,656 shares owned by Mr.
McKibben directly; 273,000 shares subject to outstanding options held
by Mr. McKibben under the Company's 1992 Stock Incentive Plan (of which
161,460 such options are currently exercisable or will become
exercisable within 60 days of the Record Date); [150,000] shares
subject to outstanding options granted to Mr. McKibben by SHI; and
[2,707,228] shares reported in the table as beneficially owned by the
Ampex Trust. Of the total shares reported as beneficially owned, Mr.
McKibben shares voting power with respect to [219,656] shares and
shares investment power with respect to [2,707,228] shares.
(3) The Ampex Retirement Master Trust (the "Ampex Trust") is a pension
trust holding assets for the Ampex Corporation Employees' Retirement
Plan and the Quantegy Media Corporation (formerly Ampex Media
Corporation) Retirement Plan. Its address is c/o State Street Bank and
Trust Company, Master Trust Services, W5A, One Enterprise Drive, North
Quincy, Massachusetts 02171. The number of shares of Class A Stock
shown in the table as beneficially owned by the Ampex Trust includes
2,519,728 outstanding shares and
13
187,500 shares issuable upon conversion of the 375 shares of
Convertible Preferred Stock held by the Ampex Trust. Investment power
with respect to all shares shown in the table is shared by Mr. Bramson
and Mr. McKibben. See Notes 1 and 2 above.
(4) The number of shares of Class A Stock shown as beneficially owned by
FMR Corp. in the table above represents shares beneficially owned by
FMR Corp., Edward C. Johnson 3D, Abigail P. Johnson, Fidelity
Management & Research Company and Fidelity Capital & Income Fund, as
reported in a Schedule 13G filed with the SEC jointly by such parties.
According to the Schedule 13G, FMR Corp. has sole voting power with
respect to 117,500, and no voting power with respect to the balance, of
such shares, and has sole dispositive power with respect to all of such
shares. The address of FMR Corp. and the other filing parties is 82
Devonshire Street, Boston, Massachusetts 02109.
(5) According to a Schedule 13G filed with the SEC, Credit Suisse Asset
Management has sole voting and dispositive power with respect to all of
the shares reported as beneficially owned by it in the above table.
This stockholder's address is 153 East 53rd Street, New York, New York
10022.
Security Ownership of Management
The following table sets forth certain information as to each class of
outstanding equity securities of the Company beneficially owned as of the Record
Date by: (i) each director and nominee; (ii) the Company's Chief Executive
Officer and the other four most highly compensated executive officers who were
officers as of December 31, 1998; and (iii) all current directors and executive
officers as a group. No executive officer or director of the Company owns
securities of any parent or subsidiary of the Company (other than directors'
qualifying shares), except as indicated in the footnotes to the table below.
Unless otherwise indicated, the persons named in the table below have sole
voting and investment power with respect to all shares shown as beneficially
owned by them. The inclusion of any shares for any stockholder in the table
below shall not be deemed an admission that such stockholder is, for any
purpose, the beneficial owner of such shares. An asterisk denotes beneficial
ownership of less than 1% of the class of securities indicated.
<TABLE>
Amount
and
Name of Nature of Percentage
Title of Class Beneficial Owner Beneficial of Class
Ownership
<S> <C> <C> <C>
Class A Stock, Edward J. Bramson(1) [8,734,839] [16.5%]
$0.01 par value
Craig L. McKibben(2) [3,349,884] [ 6.3%]
Douglas T. McClure, Jr.(3) [ 22,500] *
Peter Slusser(3) [ 12,500] *
William A. Stoltzfus, Jr.(3) [ 13,500] *
Robert L. Atchison(4) [ 301,000] *
Richard J. Jacquet(5) [ 131,000] *
Joel D. Talcott (6) [ 175,325] *
All current directors and
executive officers as a group(7) [ 9,663,664] [18.1%]
14
<PAGE>
Convertible Edward J. Bramson(1) [375] [3.8%]
Preferred Stock,
$1.00 par value Craig L. McKibben(2) [375] [3.8%]
All current directors and executive [375] [3.8%]
officers as a group
Redeemable Edward J. Bramson(1) [818] [3.7%]
Preferred Stock,
$1.00 par value Craig L. McKibben(2) [818] [3.7%]
All current directors and executive [818] [3.7%]
officers as a group
</TABLE>
- -----------------------------
(1) See Note 1 under the "Security Ownership of Certain Beneficial Owners"
table above. The shares of Convertible Preferred Stock and Redeemable
Preferred Stock reported in this table are held by the Ampex Trust. Mr.
Bramson serves as co-administrator of this trust.
(2) See Note 2 under the "Security Ownership of Certain Beneficial Owners"
table above. The shares of Convertible Preferred Stock and Redeemable
Preferred Stock reported in this table are held by the Ampex Trust. Mr.
McKibben serves as co-administrator of this trust.
(3) Includes [10,000] shares subject to outstanding options that are
currently exercisable or will become exercisable within 60 days of the
Record Date.
(4) Represents 301,000 shares subject to outstanding options granted under
the 1992 Stock Incentive Plan, of which 201,340 such options are
currently exercisable or will become exercisable within 60 days of the
Record Date.
(5) Includes 127,000 shares subject to outstanding options granted under
the 1992 Stock Incentive Plan, of which 83,110 such options are
currently exercisable or will become exercisable within 60 days of the
Record Date.
(6) Includes [146,825] shares subject to outstanding options granted under
the 1992 Stock Incentive Plan, of which 85,410 such options are
currently exercisable or will become exercisable within 60 days of the
Record Date.
(7) Includes an aggregate of 1,130,325 shares subject to outstanding
options, of which 606,320 such options are currently exercisable or
will become exercisable within 60 days of the Record Date. Shares that
are deemed beneficially owned by both Mr. Bramson and Mr. McKibben are
counted only once in the total shares reported. See Notes 1 and 2
above.
15
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors, and certain stockholders
owning more than 10% of any class of the Company's equity securities ("10%
Stockholders") to file reports with the SEC indicating their ownership of
securities of the Company and any changes in such ownership. Executive officers,
directors and 10% Stockholders are required to provide copies of these reports
to the Company. Based on a review of copies of all such reports filed with
respect to fiscal 1998 and furnished to the Company, as well as certain written
representations provided to the Company by executive officers, directors and
certain 10% Stockholders, all such reports required to be filed with respect to
fiscal 1998 have been filed in a timely manner.
16
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Compensation
The following table summarizes the compensation earned by or paid to
the Company's Chief Executive Officer and the other four most highly compensated
executive officers during 1998 who were officers as of December 31, 1998
(collectively, the "Named Executives") for their services to the Company and its
subsidiaries during fiscal 1996, 1997 and 1998. The Company does not have
employment contracts with any of the Named Executives. See "Termination of
Employment and Change-in-Control Arrangements," below.
<TABLE>
Summary Compensation Table
Long-Term Compensation
--------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------------------------------------
Long
Other Securities Term All Other
Annual Restricted Underlying Incentive Compen-
Name and Bonus Compen- Stock Options/ Plan sation
Principal Position Year Salary($) ($) sation ($) Awards SARs(#)(1) Payouts($) ($)(2)
- ------------------ ---- --------- --- ---------- ------ ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward J. Bramson, 1998 $155,008 $0 0 0 0 $0 $0
Chairman and 1997 155,008 0 0 0 0 0 0
Chief Executive 1996 160,008 0 0 0 0 0 0
Officer(3)
Robert L. Atchison, 1998 178,500 69,000 0 0 151,000 0 4,000
Vice President 1997 178,500 140,000 0 0 90,000 0 4,000
1996 177,683 165,000 0 0 40,000 0 4,000
Richard J. Jacquet, 1998 159,380 60,000 0 0 66,500 0 4,000
Vice President 1997 157,500 75,000 0 0 37,500 0 4,000
1996 156,779 75,000 0 0 22,500 0 4,000
Craig L. McKibben, 1998 172,030 135,000 0 0 169,000 0 0
Vice President, 1997 170,004 75,000 0 0 105,000 0 0
Treasurer and 1996 170,004 100,000 0 0 25,000 0 0
Chief Financial
Officer
Joel D. Talcott, 1998 156,971 108,820 0 0 49,000 0 4,000
Vice President 1997 155,160 49,213 0 0 22,500 0 4,000
and Secretary 1996 154,183 87,801 0 0 67,500 0 4,000
</TABLE>
- --------------------------
(1) On November 6, 1998 and October 28, 1997, the Stock Incentive Plan
Committee of the Board of Directors authorized the Company to allow the
holders of certain "out of the money" stock options to voluntarily
cancel those options in exchange for an equivalent number of new
options with exercise prices of $1.0625 and $3.125, respectively, (the
fair market value of the Company's Class A Stock on November 6, 1998
and October 28, 1997, respectively), but with different vesting and
expiration schedules. Accordingly:
17
<PAGE>
(i) all of the options granted to Mr. Atchison in 1998 and 65,000
of the options granted to him in 1997 were granted in exchange
for the cancellation of the same number of options.
(ii) all of the options granted to Mr. Jacquet in 1998 and 30,000
of the options granted to him in 1997 were granted in exchange
for the cancellation of the same number of options.
(iii) all of the options granted to Mr. McKibben in 1998 and 65,000
of the options granted to him in 1997 were granted in exchange
for the cancellation of the same number of options.
(iv) all of the options granted to Mr. Talcott in 1998 and 12,500
of the options granted to him in 1997 were granted in exchange
for the cancellation of the same number of options.
See "Report on Repricing of Options" and the Ten-Year Option/Repricings
table, below.
(2) All amounts disclosed under "All Other Compensation" consist of
matching Company contributions under the Ampex Savings Plan, which is
an employee-contributory savings incentive plan intended to qualify
under Section 401(k) of the Internal Revenue Code.
(3) Mr. Bramson's salary for 1996, 1997 and 1998 reflects a voluntary
reduction of $15,000, $20,000 and $20,000, respectively, in order to
make funds available for 1996, 1997 and 1998 bonuses to other
employees.
Termination of Employment and Change-in-Control Arrangements
Each Named Executive except Mr. Bramson is party to an Employment
Security Letter pursuant to which he is entitled to continuation of salary,
average bonus and medical and insurance benefits for 24 months following a
"change in control" of the Company (as defined in the Employment Security
Letter) in which he is terminated, his compensation and benefits are reduced to
less than 90% of then-current compensation and benefits or he is relocated to a
work location more than 50 miles from his current work location. Such benefits
are subject to deferral or reduction as necessary to avoid excise tax under
Section 4999 of the Internal Revenue Code and to ensure deductibility under
Section 280G of the Internal Revenue Code, and will cease if the Named Executive
accepts employment with a company engaged in business similar to the Company's
business.
Option/SAR Grants
The following table describes the options to purchase shares of the
Company's Class A Stock granted to the Company's Named Executives during fiscal
1998 and the potential value of such options at the end of their terms, assuming
certain levels of stock price appreciation.
18
<PAGE>
<TABLE>
Option/SAR Grants in Fiscal 1998
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants (1) For Option Term (1)(2)
- ----------------------------------------------------------------------------------------------------------------------------------
% of Total
Number of Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees in or Base
SARs Fiscal Price Expiration
Name Granted (#) Year (3) ($/share) Date 5% ($) 10% ($)
---- ----------- -------- --------- ---- ------ -------
<S> <C>
Edward J. Bramson 0 -- -- -- -- --
Robert L. Atchison 151,000(4)(6) 7.73% $1.0625 2/6/02 $19,708 $41,636
Richard J. Jacquet 66,500(4)(6) 3.40% $1.0625 2/6/02 $ 8,680 $18,336
Craig L. McKibben 169,000(4)(6) 8.65% $1.0625 2/6/02 $22,058 $46,599
Joel D. Talcott 49,000(4)(6) 2.51% $1.0625 2/6/02 $ 6,395 $13,511
</TABLE>
- ------------------------
(1) All options are nonqualified stock options granted pursuant to the
Company's 1992 Stock Incentive Plan. Upon exercise, the Company may
elect to pay cash to the holder for all or part of his options, rather
than issuing shares of Class A Stock. All options were granted with an
exercise price greater than or equal to the fair market value on the
date of grant.
(2) Potential realizable values reflect the difference between the option
exercise price on the date of grant and the fair market value of the
Company's Class A Stock at the end of the option term, assuming 5% and
10% compounded annual appreciation of the stock price from the date of
grant until the expiration of the option. The 5% and 10% appreciation
rates are assumed pursuant to rules promulgated by the SEC and do not
reflect actual historical or projected rates of appreciation of the
Class A Stock. Assuming such appreciation, on February 2, 2002, the
per share value would be $1.25 at 5% or $1.46 at 10% (based on a fair
market value of $1.0625 on November 11, 1998, which is the grant date
for all of the options listed in the table above. The foregoing values
do not reflect appreciation actually realized by the Named Executives.
See "Option/SAR Exercises and Values," below.
(3) For purposes of calculating these percentages, the total number of
options granted to all employees in fiscal 1998 was 1,954,600.
(4) These options become exercisable as to 34% of the shares on May 6,
1999 and as to an additional 11.0% each quarter thereafter until
November 6, 2000.
(5) On November 6, 1998, the Stock Incentive Plan Committee authorized the
holders of certain "out of the money" options to surrender those
options for cancellation in exchange for new options exercisable at
$1.0625 per share, which was the fair market value per share of Class A
Stock on November 6, 1998. Each such new option is exercisable for the
same number of shares as the canceled option for which it was
exchanged, but has a different vesting and expiration schedule. The
Ten-Year Option/SAR Repricings table included below lists each option
granted to a Named Executive pursuant to the exchange program.
19
<PAGE>
Option/SAR Exercises and Values
The following table provides certain information concerning the
exercise of stock options during 1998 and the value of unexercised options to
purchase shares of the Company's Class A Stock held by the Company's Named
Executives as of December 31, 1998.
Aggregated Option/SAR Exercises in Fiscal 1998 and
Fiscal Year End Option/SAR Values
<TABLE>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year End Fiscal Year End(1)
-------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward J. Bramson 0 $0 2,500 0 $0 $0
Robert L. Atchison 0 $0 150,000 151,000 $0 $0
Richard J. Jacquet 0 $0 60,500 66,500 $0 $0
Craig L. McKibben 0 $0 104,000 169,000 $0 $0
Joel D. Talcott 0 $0 92,925 61,375 $0 $0
</TABLE>
- ------------------------
(1) The fair market value per share of Class A Stock on December 31, 1998
was $1.0625, based on the closing price on the American Stock Exchange
(as reported by an on-line quotation service) on December 31, 1998,
which was the last trading day of the year.
20
<PAGE>
REPORT ON REPRICING OF OPTIONS
NOTE: THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SEC UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, NOTWITHSTANDING
ANY SUCH INCORPORATION BY REFERENCE OF ANY OTHER PORTIONS OF THIS PROXY
STATEMENT.
On November 6, 1998, the Stock Incentive Plan Committee of the
Company's Board of Directors (the "Stock Committee") authorized an exchange
program pursuant to which the Company offered to holders of certain "out-of-the-
money" stock options issued under the Company's 1992 Stock Incentive Plan (the
"Plan") the right to surrender those options for cancellation in exchange for
new options exercisable at $1.0625 per share, which was the fair value per share
of Class A Stock on November 6, 1998. Each new option is exercisable for the
same number of shares as the canceled option for which it was exchanged, and
will generally vest as to 34% of the underlying shares on May 6, 1999 and as to
an additional 11% of the underlying shares on a quarterly basis thereafter until
November 6, 2000. Each new option will follow an expiration schedule similar in
length to the cancelled option for which it was exchanged. Out-of-the-money
options held by Mr. Bramson, members of the Stock Committee, former employees,
non-active employees and certain employees who were involved in the Company's
keepered media development program, and options exercisable at $1.50 per share,
were not eligible to be exchanged in the exchange program. The Stock Committee
believes that this exchange program was in the best interests of the Company and
was necessary in order for the Plan to continue serving one of its primary
purposes -- to encourage key employees to remain with the Company and to
contribute toward efforts to increase the value of the Company's Class A Stock.
Prior to their cancellation pursuant to the exchange program, the out-of-the-
money options had exercise prices ranging from $2.00 to $4.875, and therefore
provided little incentive to employees.
STOCK INCENTIVE PLAN COMMITTEE
Douglas T. McClure, Jr.
Peter Slusser
William A. Stoltzfus, Jr.
The table set forth below provides certain information concerning all
adjustments to the exercise prices of outstanding stock options held by
executive officers of the Company during the past 10 years.
<TABLE>
Ten-Year Option/SAR Repricings
Number of Length of
Securities Original
Underlying Market Price Option Term
Options/ of Stock at Exercise Price Remaining at
SARS Time of at Time of Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
---- ---- ------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Atchison, 11/6/98 16,000 1.0625 2.375 1.0625 3.7 years
Vice President 18,000 1.0625 2.375 1.0625 3.6 years
52,000 1.0625 3.625 1.0625 7.0 years
25,000 1.0625 3.125 1.0625 5.8 years
40,000 1.0625 3.125 1.0625 5.2 years
25,000 1.0625 3.125 1.0625 5.2 years
10/28/97 40,000 3.1250 5.750 3.1250 0.2 years
25,000 3.1250 5.875 3.1250 5.9 years
4/25/94 40,000 2.1250 6.000 2.3750 8.2 years
18,000 2.1250 4.750 2.3750 9.1 years
-------
299,000
21
<PAGE>
Richard J. Jacquet, 11/6/98 18,000 1.0625 2.375 1.0625 3.7 years
Vice President 6,500 1.0625 2.375 1.0625 4.6 years
12,000 1.0625 3.625 1.0625 7.0 years
10,000 1.0625 3.125 1.0625 1.2 years
12,500 1.0625 3.125 1.0625 5.2 years
7,500 1.0625 3.125 1.0625 1.2 years
10/28/97 12,500 3.1250 5.750 3.1250 5.0 years
10,000 3.1250 10.500 3.1250 1.5 years
7,500 3.1250 4.875 3.1250 2.0 years
18,000 2.3750 6.000 2.3750 8.2 years
6,500 2.3750 4.750 2.3750 9.1 years
-------
121,000
Craig L. McKibben, 11/6/98 46,000 1.0625 2.375 1.0625 5.4 years
Vice President and 18,000 1.0625 2.375 1.0625 4.6 years
Treasurer 40,000 1.0625 2.375 1.0625 3.7 years
15,000 1.0625 3.125 1.0625 1.2 years
25,000 1.0625 3.125 1.0625 5.2 years
25,000 1.0625 3.125 1.0625 5.2 years
10/28/97 25,000 3.1250 5.750 3.1250 5.0 years
15,000 3.1250 4.875 3.1250 2.0 years
25,000 3.1250 4.875 3.1250 5.0 years
4/25/94 40,000 2.3750 6.000 2.3750 8.2 years
18,000 2.3750 4.750 2.3750 9.1 years
-------
292,000
Joel D. Talcott, Vice 11/6/98 18,000 1.0625 2.375 1.0625 3.7 years
President and 6,500 1.0625 2.375 1.0625 4.6 years
Secretary 12,000 1.0625 3.625 1.0625 7.0 years
12,500 1.0625 3.125 1.0625 5.2 years
10/28/97 12,500 3.1250 5.750 3.1250 5.0 years
4/25/94 18,000 2.3750 6.000 2.3750 8.2 years
6,500 2.3750 4.750 2.3750 9.1 years
------
86,000
</TABLE>
Pension Plan
The Company maintains an Employees' Retirement Plan for its employees
(the "Retirement Plan"). The Retirement Plan is a defined benefit plan under
which a participant's annual post-retirement pension benefit is generally
determined by the employee's years of credited service as determined under the
Retirement Plan ("Credited Service") and his or her average annual earnings
during the highest 60 consecutive months of the last 120 consecutive months of
service ("Final Average Annual Compensation"). Effective February 1, 1994, the
accrual of additional benefits under the Retirement Plan was discontinued by
providing that a participant's benefits will be determined on the basis of
Credited Service and Final Average Annual Compensation accrued to the earlier of
termination of employment or January 31, 1994. There are no employee
contributions under the Retirement Plan. Under applicable Internal Revenue Code
limits, the maximum annual benefit payable under the Retirement Plan, as of
January 1, 1998, is $130,000, assuming that payments are made on a straight life
or qualified joint and survivor basis, beginning at age 65.
The following table describes the estimated annual benefits payable
upon retirement under the Retirement Plan at specified compensation levels and
for specified years of Credited Service. As indicated above, Final Average
Annual Compensation and Years of Credited Service for each employee were frozen
during 1994.
22
<PAGE>
<TABLE>
Pension Plan Table
Final Average
Annual
Compensation Years of Credited Service
- ----------------------------------------------------------------------------------------------------------------------------------
15 20 25 30 35 40
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
125,000 $25,200 $33,500 $41,900 $50,300 $ 58,700 $ 67,100
150,000 30,400 40,500 50,700 60,800 70,900 81,100
175,000 35,700 47,500 59,400 71,300 83,200 95,100
200,000 40,900 54,500 68,200 81,800 95,400 109,100
225,000 44,900 59,900 74,900 89,900 104,900 119,800
250,000 44,900 59,900 74,900 89,900 104,900 119,800
300,000 44,900 59,900 74,900 89,900 104,900 119,800
400,000 44,900 59,900 74,900 89,900 104,900 119,800
450,000 44,900 59,900 74,900 89,900 104,900 119,800
500,000 44,900 59,900 74,900 89,900 104,900 119,800
</TABLE>
A participant's annual pension payable as of normal retirement date
will be equal to the following (subject to a minimum benefit level and to the
freezing of benefits as described above): 1.1% of that portion of the Final
Average Annual Compensation, up to the "Social Security Integration Amount" in
effect for 1994, plus 1.4% of that portion of the Final Average Annual
Compensation in excess of the Social Security Integration Amount, multiplied by
the number of years of Credited Service. As a result of the benefit freeze, the
Social Security Integration Amount, which is determined based on a participant's
year of birth, has been frozen at the level that was applicable for each year of
birth in 1994. The Social Security Integration Amount was $24,312 for a
participant retiring in 1994 at age 65. For purposes of determining Final
Average Annual Compensation, salary, overtime and sales commissions are
included. For each of the Named Executives covered by the Retirement Plan, such
compensation for fiscal 1993 is equal to the compensation disclosed in the
"Salary" column in the Summary Compensation Table. Because of the freeze
implemented in January 1994, compensation during 1994 or subsequent years will
not be used to determine Final Average Annual Compensation for the Named
Executives. The table above assumes that benefits are payable for life from
normal retirement date (age 65) and are computed on a straight life basis. The
benefits payable are not subject to any deduction for Social Security or other
offset amounts.
Since January 31, 1994, the Final Average Annual Compensation and the
estimated years of Credited Service for each of the Named Executives have been
as follows: Mr. Atchison -- $138,524; 18 years 2 months; Mr. Jacquet --
$117,987; 5 years 5 months; and Mr. Talcott -- $130,706; 19 years 3 months. Mr.
Bramson and Mr. McKibben are not participants in the Retirement Plan. In
addition to the estimated benefits payable shown in the table above, Mr. Talcott
is eligible to receive $15,140 per year upon retirement at normal retirement age
under the terms of the Ampex Corporation Supplemental Retirement Income Plan,
which was terminated as of December 31, 1987. No other Named Executives are
eligible to participate in this plan.
23
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
NOTE: THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SEC UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, NOTWITHSTANDING
ANY INCORPORATION BY REFERENCE OF ANY OTHER PORTIONS OF THIS PROXY STATEMENT.
Compensation for the Company's executive officers for fiscal 1998 was
determined by the Compensation Committee of the Board of Directors (with Mr.
Bramson abstaining from decisions with respect to his own compensation). The
Compensation Committee (the "Committee") has provided the following report with
respect to the compensation of executive officers for fiscal 1998.
Overview
The Company believes that the compensation of all employees, including
executive officers, must be sufficient to attract and retain highly qualified
personnel and must align compensation with the Company's short-term and
long-term business strategies and performance goals. In the case of executive
officers, it must also provide meaningful incentives for measurably superior
performance. To insure that its compensation practices remain competitive, the
Company regularly compares its compensation policies with those of other similar
companies.
The Company's compensation philosophy for executive officers is to pay
above-average total compensation when superior performance is achieved, both by
the Company and the individual executive. In recent years, because of the
Company's financial situation and its cash requirements, superior performance
for the Company has been equated with achieving certain levels of sales,
operating cash flow, profit and other indicators of financial performance.
Superior performance by an individual is measured according to a variety of
objective and subjective factors. Based on available data reviewed by the
Company, the Company believes that the base salary of its chief executive
officer is significantly below the median salary for comparable positions with
other companies in the electronics and other technology industries. Aggregate
base salaries for the Company's other executive officers as a group are below
average for comparable positions in other high-technology companies. If superior
performance is achieved both by the Company and the individual, the base salary
plus cash bonuses will compensate an executive at above-average levels. If the
Company does not achieve financial targets and/or individual performance is not
superior, total compensation will be below comparable average total compensation
levels.
Components of Executive Compensation
The Company provides several different types of compensation for its
executive officers in order to achieve its goals of encouraging technological
innovation, fostering teamwork and enhancing the loyalty of valuable employees.
The Committee believes that the achievement of these goals will ultimately
enhance stockholder value. The components of executive compensation are as
follows:
Salary. The Committee establishes base salaries for its executive
officers by reviewing salaries and annual bonuses for comparable positions with
other companies. Salary increases are granted from time to time based on both
individual performance and on the Company's ability to pay such increases.
Cash Incentive Plans. In 1996, 1997 and 1998, the Company paid its
executive officers cash bonuses under cash incentive plans based on the
financial performance of the Company and on their individual performance.
1992 Stock Incentive Plan. The Company's 1992 Stock Incentive Plan
(the "Plan") provides for the granting of stock options and stock appreciation
rights with respect to the Company's Class A Stock to directors, executive
officers and other employees and service providers. Grants under the Plan during
1998 to executive officers are described above in "Compensation of Executive
Officers -- Option/SAR Grants." The purpose of the Plan is to provide additional
incentives for participants to maximize stockholder value. Through the Plan, the
long-range interests of employees are aligned with the interests of the
stockholders of the Company as these employees build an ownership interest in
the Company. In fiscal 1996, the Plan was amended to conform to regulations
adopted by the SEC under Section 16 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"). As so amended, the Plan provides that, except with
24
<PAGE>
respect to non-employee directors, all decisions with respect to officers and
directors subject to Section 16 of the 1934 Act shall be made by a Committee
that is composed solely of two or more non-employee directors. All decisions
with regard to awards to any non-employee directors shall be made by the
Company's Board of Directors, without the participation or vote of such
non-employee director. During fiscal 1998, the Stock Incentive Plan Committee of
the Board, which is composed solely of non-employee directors, made all
decisions with respect to options for executive officers of the Company.
Limitation on Deductibility of Certain Compensation
The Internal Revenue Code was amended in 1993 to add Section 162(m),
which limits the deductibility, for income tax purposes, of certain executive
compensation in excess of $1,000,000 for any individual Named Executive in a
single tax year. Based on the current compensation of its Named Executives, the
Company does not believe that Section 162(m) will have any impact on the Company
in the near term. Accordingly, the Company has not yet established a general
policy regarding potential changes in its compensation programs to address the
possible impact of Section 162(m). However, during 1994 the 1992 Stock Incentive
Plan was amended to minimize the effect of Section 162(m) on compensation under
the Plan.
Fiscal 1998 Compensation
Compensation of Chief Executive Officer; Relationship to Company
Performance. For fiscal 1998, Edward J. Bramson, the Company's Chairman and
Chief Executive Officer, received a salary of $155,008 for his services to the
Company and its subsidiaries. The Compensation Committee had initially set his
salary at $175,000 for 1998. However, Mr. Bramson offered to reduce his salary
by $20,000 in order to make funds available for bonuses to other employees. As
indicated above, the Committee believes that Mr. Bramson's base salary is
significantly below the median salary for chief executive officers with other
companies in the electronics and other technology industries.
Mr. Bramson did not receive any options under the Plan during fiscal
1998. In February 1998, Mr. Bramson purchased a total of 75,000 shares of Class
A Stock from the Company at prevailing market prices. Of these shares, 18,750
are subject to repurchase by the Company under certain circumstances. Mr.
Bramson and his affiliates also own other shares of Class A Stock. See "Security
Ownership of Certain Beneficial Owners and Management," above. The Committee
believes that this stock ownership by Mr. Bramson and his affiliates creates a
strong incentive for Mr. Bramson to remain with the Company, as well as aligning
his interest with the interests of the stockholders of the Company by giving him
an incentive to enhance the market value of the Company's Class A Stock. See
"Certain Relationships and Related Transactions," below.
The value of Mr. Bramson's stock options (as well as the value of
shares that he and his affiliates own) is directly related to the performance of
the Company, as measured by the price of its Class A Stock. The salary component
of Mr. Bramson's compensation for fiscal 1998 was a fixed amount and accordingly
did not have any particular relationship to the Company's performance. However,
the Committee believes that Mr. Bramson's contributions to the Company during
1998 amply justified his salary. In the future, Mr. Bramson's compensation
package may include eligibility for cash bonuses, the payment of which will be
tied to both individual and Company performance.
Compensation of Other Executive Officers. The compensation of other
executive officers for fiscal 1998 was determined by the Compensation Committee
in accordance with the general principles described above. Salary levels
increased from 1997 levels, and were below average for comparable positions with
other high technology companies. For the reasons indicated below, the Committee
concluded that cash bonuses for fiscal 1998 to all executive officers except Mr.
Bramson were appropriate. The bonuses ranged in amount from $20,000 to $135,000
and totaled $392,820 for the Company's six executive officers. Of this amount,
$260,320 was paid based on the accomplishment of specific objectives by
individual officers, or the achievement of specific financial performance levels
by the Company. A substantial portion of bonuses paid for 1998 was allocated to
executives by Mr. Bramson in accordance with authority delegated to him by the
Committee, and the remainder was approved by the Committee, in its discretion,
after review of recommendations made by Mr. Bramson. In making the decision to
pay discretionary bonuses for fiscal 1998, the Committee considered the
contributions made by each officer in his particular area of responsibility.
25
<PAGE>
Except for options granted pursuant to the exchange program described
below, the Stock Incentive Plan Committee did not grant any options under the
Plan to the named executive officers. See "Option/SAR Grants in Fiscal 1998,"
above.
On November 6, 1998, the Stock Incentive Plan Committee of the
Company's Board of Directors authorized an exchange program pursuant to which
holders of certain "out-of-the-money" stock options issued under the Plan could
elect to surrender those options for cancellation in exchange for new options
exercisable at $1.0625 per share, which was the fair value per share of the
Class A Stock on November 6, 1998. Each new option is exercisable for the same
number of shares as the canceled option for which it was exchanged, but follows
a different vesting and expiration schedule, beginning on the new grant date.
Out-of-the-money options held by Mr. Bramson, members of the Stock Incentive
Plan Committee, former employees, non-active employees and certain employees who
were involved in the Company's keepered media development program, and options
exercisable at $1.50 per share, were not eligible to be exchanged in the
exchange program. The Stock Incentive Plan Committee believed that this exchange
program was in the best interests of the Company and was necessary in order for
the Plan to continue serving one of its primary purposes -- to encourage key
employees to remain with the Company and to contribute toward efforts to
increase the value of the Company's Class A Stock.
COMPENSATION COMMITTEE
Peter Slusser, Chairman
Edward J. Bramson
Douglas T. McClure, Jr.
William A. Stoltzfus, Jr.
26
<PAGE>
COMPANY PERFORMANCE GRAPH
NOTE: THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SEC UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, NOTWITHSTANDING
ANY INCORPORATION BY REFERENCE OF ANY OTHER PORTIONS OF THIS PROXY STATEMENT.
The following chart compares the stock price performance of the
Company from December 31, 1993 through December 31, 1998 to that of the
companies included in the S&P 500 Index and the companies included in the S&P
High Technology Composite Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG AMPEX CORPORATION, S&P 500
INDEX AND S&P HIGH TECHNOLOGY COMPOSITE INDEX FROM DECEMBER 31, 1993 THROUGH
DECEMBER 31, 1998*
[INSERT GRAPH]
December 31
----------------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Ampex $ 100.00 $ 42.52 $160.00 $ 375.00 $ 95.00 $ 42.50
S&P 500 100.00 101.32 139.40 171.40 228.59 293.91
S&P HTCI 100.00 116.55 167.88 238.17 300.32 529.48
* Assumes $100 invested in Class A Stock, the S&P 500 Index and the S&P High
Technology Composite Index on December 31, 1993. Data with respect to returns
for the S&P indices is not readily available for periods shorter than one month.
Total return is calculated for the S&P indices assuming reinvestment of
dividends. The Company has not paid any dividends.
27
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1998 to the present, there have been no transactions
involving more than $60,000 in which the Company or any of its subsidiaries was
a party and in which any executive officer, director, beneficial owner of more
than 5% of any class of the Company's voting securities, or member of the
immediate family of any of the foregoing persons, had a material interest,
except as indicated in "Compensation of Executive Officers," above, and as
follows:
In February 1995, Sherborne Investments Corporation ("SIC"), a
corporation controlled by the Company's Chief Executive Officer, Edward J.
Bramson, issued a promissory note to the Company in connection with the purchase
by SIC, as Mr. Bramson's designee, of 1,500,000 shares of Class A Stock. The
note is due and payable in full in January 2000 and bears interests at the
applicable Federal rate. Accrued interest on the note from January 1, 1998
through December 31, 1998, which amounted to $141,612, was paid in cash in 1998.
In January 1999, the Compensation Committee authorized SIC to repay this note
either in cash or, at its option, by surrendering shares of Class A Stock to the
Company, valued at the fair market value of those shares on the date of
repayment.
In October 1996, SH Securities Co., LLC ("SHSC"), a limited liability
company controlled by Mr. Bramson, issued a promissory note (the "Old Note") to
the Company in connection with the purchase by SHSC, as Mr. Bramson's designee,
of 400,000 shares of Class A Stock. The Old Note was due and payable in full in
October 2001 and provided for interest to be paid at the applicable Federal
rate, which was then 6.72%. All of the 400,000 shares of Class A Stock were
pledged to the Company as security for payment on the Old Note. In September
1998, in recognition of Mr. Bramson's contributions to the Company, the Board of
Directors decided to modify the terms of the Old Note in order to provide him
with a further incentive for his continued service as an officer and director of
the Company. Accordingly, the Company exchanged the Old Note for a New Note in
the same amount, upon the following terms. The New Note will mature on October
15, 2008. Subject to Mr. Bramson's continued service as an officer and director
of the Company, the principal amount of the New Note will be reduced by $176,000
each year to $440,000 on the maturity date, and accrued interest payable on the
note will be forgiven on each interest payment date. The New Note will bear
interest at 5.74% per annum, which was the applicable Federal rate in effect at
the time the New Note was issued. If, during any period of ten consecutive
trading days, the average closing price of the Class A Stock on the American
Stock Exchange equals or exceeds $7.00, the unpaid principal balance of the New
Note will automatically be reduced to $440,000. Payments under the New Note are
also secured by a pledge of the 400,000 shares of Class A Stock. On October 15,
1998, the principal amount of the New Note was reduced by $176,000 (from
$2,200,000 to $2,024,000) and $147,840 of accrued interest through that date was
forgiven in accordance with foregoing terms.
On October 29, 1997, November 7, 1997 and February 18, 1998, the
Company issued a total of 400,000 shares of its Class A Stock to Mr. Bramson.
The shares were sold for an aggregate purchase price of $1,268,752 (based on the
fair value per share of Class A Stock on the date the Company's Board of
Directors approved each such issuance), of which 20% was paid in cash and the
balance by promissory notes of Mr. Bramson (the "1997-1998 Notes"). The
1997-1998 Notes bear interest, payable annually at the applicable Federal rate,
and are payable in full five years after the date of issuance. Mr. Bramson paid
accrued interest, in cash, on the 1997-1998 Notes equal to $22,863 on October
29, 1998, $27,549 on November 7, 1998 and $9,946 on February 18, 1999. All of
the 400,000 shares have been pledged to the Company as security for payment of
the 1997-1998 Notes. Of these 400,000 shares, 100,000 are currently subject to
vesting. If Mr. Bramson voluntarily resigns or is terminated for cause before
the second anniversary of each date of issuance, the Company may repurchase up
to 100,000 shares at the original purchase price. In January 1999, the
Compensation Committee authorized Mr. Bramson to repay 1997-1998 Notes either in
cash or, at his option, by surrendering shares of Class A Stock to the Company,
valued at fair market value on the date of such repayment.
In September 1998, the Company also agreed, pursuant to two
agreements, that in the event of a Change of Control (as defined therein), Mr.
Bramson will have the right to surrender the shares of Class A Stock securing
the New Note and the 1997-1998 Notes, in exchange for the full release and
cancellation of any claims by the Company for repayment of such Notes, and the
return of such Notes and any cash payments previously made by him in payment for
such shares, without interest.
28
<PAGE>
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The Company anticipates that its 2000 Annual Meeting of Stockholders
will be held on or about May 19, 2000. Under SEC regulations, the deadline for
submitting stockholder proposals for inclusion in the Company's Proxy Statement
and proxy relating to its 2000 Annual Meeting of Stockholders is [December 12,
1999]. Under the Company's By-Laws, stockholder proposals submitted after
[December 12, 1999] must be received by the Company between [February 14] and
[March 5, 2000] in order to be considered at the 2000 Annual Meeting.
OTHER BUSINESS
The Board does not presently intend to bring any other business before
the Meeting and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the accompanying Notice of Meeting. As
to any business that may properly come before the Meeting, however, it is
intended that proxies, in the form enclosed, will be voted in accordance with
the judgment of the persons voting such proxies.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each person whose proxy is
solicited, upon the written request of any such person, a copy of the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1998 filed
with the SEC, including the financial statements and the schedules thereto. The
Company does not undertake to furnish without charge copies of all exhibits to
its Form 10-K, but will furnish any exhibit upon the payment of a charge equal
to the Company's costs of copying and mailing any such exhibits. Such written
requests should be directed to Ms. Karen Schweikher, Director of Investor
Relations, Ampex Corporation, 500 Broadway, Mail Stop 4205, Redwood City,
California 94063. Each such request must set forth a good faith representation
that, as of March 31, 1999, the person making the request was a beneficial owner
of securities entitled to vote at the Meeting.
By Order of the Board of Directors
Edward J. Bramson
Chairman
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
29
<PAGE>
ANNEX A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
AMPEX CORPORATION
It is hereby certified that:
FIRST:(a) The present name of the Corporation (hereinafter called the
"Corporation") is Ampex Corporation.
(b) The name under which the Corporation was originally incorporated
was Ampex Delaware Incorporated, and the date of filing the original Certificate
of Incorporation of the Corporation with the Secretary of State of the State of
Delaware was January 22, 1992.
SECOND: Section 4.1 of ARTICLE FOURTH of the Restated Certificate of
Incorporation, as amended, of the Corporation is hereby amended in its entirety
to read as follows:
4.1 Capital Stock. The total number of shares of capital stock
which the Corporation shall have the authority to issue is 226,000,000,
consisting of three classes of capital stock: 175,000,000 shares of Class A
Common Stock, par value $0.01 per share (the "Class A Common Stock"); 50,000,000
shares of Class C Common Stock, par value $0.01 per share (the "Class C Common
Stock"); and 1,000,000 shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock").
THIRD: The amendment set forth above has been duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its undersigned officer this ____ day of May, 1999.
AMPEX CORPORATION
By ________________________________
Name:
Title:
30
<PAGE>
PROXY CARD
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE
ANNUAL MEETING OF STOCKHOLDERS
AMPEX CORPORATION
MAY 14, 1999
|PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED|
PLEASE MARK YOUR VOTES
[ X ] AS IN THIS EXAMPLE
<TABLE>
FOR the nominee WITHHOLD Authority to vote for
listed at right the nominee at right
1. ELECTION OF [ ] [ ] NOMINEE: Douglas T. McClure, Jr.
CLASS II
DIRECTOR
FOR AGAINST ABSTAIN
<S> <C>
2. PROPOSAL TO AMEND RESTATED [ ] [ ] [ ]
CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND 1992 STOCK [ ] [ ] [ ]
INCENTIVE PLAN TO INCREASE
SHARES RESERVED THEREUNDER
FOR AGAINST ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION [ ] [ ] [ ]
OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE 1999 FISCAL YEAR
I PLAN TO ATTEND MEETING [ ]
</TABLE>
The undersigned acknowledges receipt of (a) the Notice of 1999 Annual Meeting of
Stockholders, (b) the accompanying Proxy Statement and (c) the Company's 1998
Annual Report.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES
SIGNATURE________________ DATE____, 1999 SIGNATURE____________ DATE______, 1999
Signature if held jointly
PROXY INSTRUCTIONS:
1. Please sign exactly as the name or names appear on your stock certificate
(as indicated hereon).
2. If the shares are issued in the name of two or more persons, all of them
must sign the proxy.
3. A proxy executed by a corporation must be signed in its name by an
authorized officer.
4. Executors, administrators, trustees and partners should indicate their
capacity when signing.
31
<PAGE>
AMPEX CORPORATION
CLASS A COMMON STOCK PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 14, 1999
The undersigned hereby appoints Edward J. Bramson and Craig L.
McKibben, or either of them, each with full power of substitution, as proxies to
represent the undersigned at the Annual Meeting of Stockholders of AMPEX
CORPORATION to be held at the Westin St. Francis Hotel, 335 Powell Street, San
Francisco, California on May 14, 1999 at 9:00 a.m., and any adjournments
thereof, and to vote the number of shares of the CLASS A COMMON STOCK OF AMPEX
CORPORATION that the undersigned would be entitled to vote if personally
present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMPEX
CORPORATION. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION,
THIS PROXY WILL BE VOTED FOR THE NOMINEE FOR ELECTION NAMED ON THE REVERSE AND
FOR PROPOSALS 2, 3 AND 4.
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF TO THE EXTENT AUTHORIZED BY RULE 14A-4(C) PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION AND BY APPLICABLE STATE LAWS (INCLUDING MATTERS THAT THE
PROXY HOLDERS DO NOT KNOW, A REASONABLE TIME BEFORE THIS SOLICITATION, ARE TO BE
PRESENTED).
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
32
